Directors and officers insurance covers exactly that, directors and officers of not just a company but any charity or institution that is run by a board or committee. Even part time or a non-executive directors can be exposed. If a third party suffers financially from a decision you have made or helped make, they can take legal action. Statistically, you are most likely to be sued by your shareholders.
You may be thinking
But that’s not the case. D&O doesn’t just protect you from shareholders. Employees, customers, suppliers, banks, HMRC and even environmental groups and regulatory bodies can potentially sue you, and that’s not all.
So now you may be asking
But these policies only protect you from employee or third party injury or damage to property, or losses due to negligent advice or services. You personally, as the director/officer can be sued by any of the previous entities mentioned for losses to the company and its shareholders through breach of conduct. You can even be sued by your own partner if they think you have not been acting in the best interest of the company. On top of this, because you may be a small company without shareholders it is usually easier to successfully prove personal liability. And what’s more, if a claim is made against you and you win, you are still left with legal fees that you will need to pay. With a D&O policy those would be covered.
You may still think that your business it too small or that this doesn’t apply to you. But can you be sure?